United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _____________ to ______________
Commission File Number 0-21451
BOWLIN OUTDOOR ADVERTISING & TRAVEL CENTERS INCORPORATED
(Exact name of registrant as specified in its charter)
NEVADA 85-0113644
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
150 LOUISIANA NE, ALBUQUERQUE, NM 87108
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 505-266-5985
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ___
As of December 13, 2000, 4,573,348 shares of the issuer's common stock were
outstanding.
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
October 31, 2000 and January 31, 2000...............................2
Consolidated Statements of Income
for the Three and Nine Months Ended
October 31, 2000 and 1999...........................................4
Consolidated Statement of Stockholders'
Equity for the Nine Months Ended October 31, 2000...................5
Consolidated Statements of Cash Flows for the
Nine Months Ended October 31, 2000 and 1999.........................6
Notes to the Consolidated Financial Statements......................8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk........................................................15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................15
Item 2. Changes in Securities and Use of Proceeds .........................15
Item 3. Defaults Upon Senior Securities....................................15
Item 4. Submission of Matters to a Vote of Security Holders................16
Item 5. Other Information..................................................16
Item 6. Exhibits and Reports on Form 8-K...................................16
Signatures.........................................................16
1
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands, except share data)
OCTOBER 31, JANUARY 31,
2000 2000
(Unaudited)
----------- -----------
Current assets:
Cash and cash equivalents $ 3,324 $ 1,559
Accounts receivable, Outdoor Advertising, net 675 595
Accounts receivable, other 446 559
Accounts receivable, related parties 75 122
Inventories 3,507 3,534
Prepaid expenses and other current assets 881 693
Income taxes 234 849
Notes receivable, related parties 24 14
----------- -----------
Total current assets 9,166 7,925
Property & equipment, net 29,787 30,556
Intangible assets, net 1,791 2,024
Other assets 471 276
----------- -----------
Total assets $ 41,215 $ 40,781
=========== ===========
(Continued)
2
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands, except share data)
OCTOBER 31, JANUARY 31,
2000 2000
(Unaudited)
----------- -----------
Current liabilities:
Short-term borrowings, bank $ 907 $ 242
Accounts payable 1,491 1,417
Current installments of long-term debt 1,663 1,503
Accrued liabilities 471 455
Deferred income 200 142
----------- -----------
Total current liabilities 4,732 3,759
Deferred income taxes 982 898
Long-term debt, less current installments 19,641 20,886
----------- -----------
Total liabilities 25,355 25,543
Stockholders' equity:
Common stock, $.001 par value; authorized
100,000,000 shares; issued and outstanding
4,475,348 and 4,384,848 shares 4 4
Additional paid-in capital 11,983 11,604
Retained earnings 3,873 3,630
----------- -----------
Total stockholders' equity 15,860 15,238
----------- -----------
Total liabilities and stockholders' equity $ 41,215 $ 40,781
=========== ===========
See accompanying notes to consolidated financial statements.
3
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Gross sales $ 2,253 $ 1,981 $ 6,514 $ 5,818
Operating expenses:
Direct operating expenses 1,057 918 3,024 2,631
General and administrative expenses 245 230 705 665
Depreciation and amortization 511 462 1,488 1,308
Management fee expense 58 52 161 155
----------- ----------- ----------- -----------
Operating income 382 319 1,136 1,059
Non-operating income (expense):
Gain (loss) on sale of property
and equipment (15) (2) (15) 6
Interest expense (405) (339) (1,163) (955)
----------- ----------- ----------- -----------
Total non-operating income (expense) (420) (341) (1,178) (949)
Income (loss) from continuing operations
before income taxes (38) (22) (42) 110
Income tax (benefit) from continuing
operations (6) (6) (5) 49
----------- ----------- ----------- -----------
Income (loss) from continuing operations (32) (16) (37) 61
Income (loss) from discontinued operations
(net of income taxes) (72) 275 280 665
----------- ----------- ----------- -----------
Net income (loss) $ (104) $ 259 $ 243 $ 726
=========== =========== =========== ===========
Weighted average common shares 4,400,041 4,384,848 4,390,312 4,384,848
Potential dilutive common shares 4,400,041 4,384,848 4,390,312 4,384,848
Basic (loss) earnings per share:
Continuing operations $ (0.00) $ (0.00) $ (0.01) $ 0.02
Discontinued operations (0.02) 0.06 0.06 0.15
----------- ----------- ----------- -----------
Basic (loss) earnings per share $ (0.02) $ 0.06 $ 0.05 $ 0.17
=========== =========== =========== ===========
Diluted (loss) earnings per share:
Continuing operations $ (0.00) $ (0.00) $ (0.01) $ 0.02
Discontinued operations (0.02) 0.06 0.06 0.15
----------- ----------- ----------- -----------
Diluted (loss) earnings per share $ (0.02) $ 0.06 $ 0.05 $ 0.17
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
4
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
FOR THE NINE MONTHS ENDED OCTOBER 31, 2000
(UNAUDITED)
--------------------------------------------------------
COMMON ADDITIONAL
NUMBER STOCK, PAID-IN RETAINED
OF SHARES AT PAR CAPITAL EARNINGS TOTAL
--------- -------- ---------- -------- ---------
Balance at January 31, 2000 4,384,848 $ 4 $ 11,604 $ 3,630 $ 15,238
Stock option exercises 90,500 362 362
Stock based compensation 17 17
Net income 243 243
--------------------------------------------------------
Balance at October 31, 2000 4,475,348 $ 4 $ 11,983 $ 3,873 $ 15,860
========================================================
See accompanying notes to consolidated financial statements.
5
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
FOR THE NINE MONTHS ENDED
-------------------------------
OCTOBER 31 OCTOBER 31
2000 1999
(Unaudited) (Unaudited)
----------- -----------
Cash flows from operating activities:
Net income $ 243 $ 726
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,077 1,848
Amortization of loan fees 132 140
Provision for bad debts 55 27
Loss on abandonment of property 29 --
Gain from insurance proceeds -- (759)
Gain on sales of property and equipment (120) (17)
Deferred income taxes 84 428
Imputed interest 7 8
Stock based compensation 17 --
Changes in operating assets and liabilities, net 627 323
----------- -----------
Net cash provided by operating activities 3,151 2,724
Cash flows from investing activities:
Proceeds from sale of assets 207 39
Business acquisitions -- (1,516)
Purchases of property and equipment, net (1,496) (4,144)
Proceeds from insurance -- 699
Capital received from partnership -- 15
Proceeds (disbursements) from notes receivable, net (32) 2
----------- -----------
Net cash used in investing activities (1,321) (4,905)
Cash flows from financing activities:
Short-term borrowings, bank, net 665 1,199
Borrowings on long-term debt -- 1,750
Payments on long-term debt (1,092) (940)
Proceeds from stock option exercises 362 --
----------- -----------
Net cash (used in) provided by financing activities (65) 2,009
Net increase in cash and cash equivalents 1,765 (172)
Cash and cash equivalents at beginning of period 1,559 2,199
----------- -----------
Cash and cash equivalents at end of period $ 3,324 $ 2,027
=========== ===========
6
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
(Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(In thousands)
OCTOBER 31 OCTOBER 31
2000 1999
(Unaudited) (Unaudited)
----------- -----------
Supplemental disclosure of cash flow information:
Sale of property and equipment in exchange
for note receivable $ 180 $ --
=========== ===========
Acquisitions:
Fair value of assets acquired and liabilities assumed
at the date of the acquisitions were as follows:
Prepaid expenses $ -- $ 3
Billboards -- 1,463
Covenants not to compete -- 50
=========== ===========
See accompanying notes to consolidated financial statements.
7
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The consolidated financial statements of Bowlin Outdoor Advertising &
Travel Centers, Incorporated (the Company or BOATC) for the three and nine
months ended October 31, 2000 and 1999 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes, together with management's
discussion and analysis of financial condition and results of operations,
contained in the Company's annual report on Form 10-K for the fiscal year
ended January 31, 2000. Results of operations for interim periods are not
necessarily indicative of results that may be expected for the year as a
whole.
2. DISCONTINUED OPERATIONS: On October 3, 2000, an agreement and plan of
merger between Lamar Advertising Company, Lamar Southwest Acquisition
Corporation and BOATC was signed. In the merger, Lamar Southwest
Acquisition Corporation, a newly formed, wholly owned subsidiary of Lamar,
will merge with and into BOATC. BOATC will be the surviving corporation and
will continue to exist under Nevada law as a wholly owned subsidiary of
Lamar. The articles of incorporation of BOATC, which will be amended and
restated and filed with the articles of merger, will be the articles of
incorporation of the surviving corporation. The by-laws of Lamar Southwest,
as in effect immediately before the merger, will be the by-laws of the
surviving corporation.
BOATC and its newly formed wholly owned subsidiary, Bowlin Travel Centers,
Inc., (BTC) entered into a contribution agreement dated as of November 1,
2000. This contribution agreement provides that certain assets and
liabilities of BOATC related to the travel centers segment and corporate
operations of the Company will be contributed to BTC in exchange for shares
of stock in BTC. BOATC will then distribute the shares of BTC to the
stockholders of BOATC immediately prior to the completion of the merger
with Lamar. The business, assets and liabilities of the travel centers
segment and corporate operations, will not be acquired by Lamar.
Accordingly, the results of operations for the travel centers segment and
corporate operations have been presented as discontinued operations and
prior periods have been restated.
Rest of page intentionally left blank
8
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Net sales and income (loss) from discontinued operations (unaudited) are as
follows:
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 1999 2000 1999
------------- ------------- ------------- -------------
Net sales $ 6,378 $ 6,808 $ 20,929 $ 20,699
Operating income 18 31 723 676
Income tax expense (benefit) (43) 172 178 416
Income (loss) from
discontinued operations $ (72) $ 275 $ 280 $ 665
============= ============= ============= =============
Net assets of discontinued operations (unaudited) are as follows:
OCTOBER 31, JANUARY 31,
2000 2000
------------- -------------
Current assets $ 6,888 $ 5,732
Noncurrent assets 10,840 11,259
Current liabilities 1,966 2,045
Noncurrent liabilities 6,460 6,825
------------- -------------
Net assets of discontinued operations $ 9,302 $ 8,121
============= =============
The merger is scheduled to be voted on by the stockholders of BOATC at a
special meeting of the stockholders on January 19, 2001. The merger is
subject to approval by the stockholders of BOATC and the satisfaction of
certain other conditions.
3. In May 2000, the Company sold certain assets, including land and equipment,
to a third party for $25,000 cash and a note receivable for $400,000. The
note receivable has a stated rate of interest of 8 percent and is payable
in annual installments of $37,500 through 2004 with the balance due in
2005. The assets sold had a carrying value of $170,258 and the costs
incurred to sell the assets was $6,043. The gain on the sale of the
property was $248,699, of which $14,625 was recognized initially and
$234,074 was deferred and will be recognized into income using the
installment method as payments are received. The deferred gain is reflected
as a reduction to the note receivable in the accompanying balance sheet.
4. STOCKHOLDERS' EQUITY: In December 1996, BOATC completed an initial public
offering of 1,100,000 shares of common stock at $8.00 per share. Concurrent
with the closing in the initial public offering, BOATC issued a five-year
nonredeemable option to purchase up to 93,500 shares of common stock at an
exercise price equal to 120 percent of the offering price, or $9.60 per
share to the underwriter. The option became exercisable in December 1997.
As of September 15, 2000 there was a revision to the option agreement
(cancellation of the underwriter option for 93,500 shares at $9.60 and
replaced with an option for 10,000 shares at $5.00 per share). This
resulted in a charge to income of $16,881.
5. EARNINGS PER SHARE. Potential dilutive common shares have been excluded
from the determination of earnings per share for the three months ended
October 31, 2000 and 1999 and the nine months ended October 31, 2000 due to
losses from continuing operations during those respective periods. For the
nine months ended October 31, 1999, there were no potential dilutive
common shares outstanding.
9
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CERTAIN STATEMENTS CONTAINED HEREIN WITH RESPECT TO FACTORS WHICH MAY AFFECT
FUTURE EARNINGS, INCLUDING MANAGEMENT'S BELIEFS AND ASSUMPTIONS BASED ON
INFORMATION CURRENTLY AVAILABLE, ARE FORWARD-LOOKING STATEMENTS MADE PURSUANT TO
THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. SUCH FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS INVOLVE
RISKS AND UNCERTAINTIES, AND RESULTS COULD VARY MATERIALLY FROM THE DESCRIPTIONS
CONTAINED HEREIN.
OVERVIEW
The following is a discussion of the consolidated financial condition and
results of operations of the Company as of and for the periods ended October 31,
2000 and 1999. This discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes included
in the Company's Form 10-K for the fiscal year ended January 31, 2000.
The Company has presented selected operating data which separately sets forth
the revenue, expenses and operating income. The discussion of results of
operations which follows compares such selected operating data for the interim
periods presented.
Rest of page intentionally left blank
10
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
RESULTS OF OPERATIONS
The following table presents certain income and expense items derived from the
Consolidated Statements of Income for the three and nine months ended October 31
(unaudited and amounts in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
OUTDOOR ADVERTISING:
Gross sales $ 2,253 $ 1,981 $ 6,514 $ 5,818
Direct operating expenses 1,057 918 3,024 2,631
----------- ----------- ---------- ----------
1,196 1,063 3,490 3,187
General and administrative expenses 245 230 705 665
Depreciation and amortization 511 462 1,488 1,308
Management fee expense 58 52 161 155
----------- ----------- ---------- ----------
Operating income 382 319 1,136 1,059
Other non-operating income (loss), net
Gain (loss) on sale of property and equipment (15) (2) (15) 6
Interest expense (405) (339) (1,163) (955)
----------- ----------- ---------- ----------
Total non-operating income (expense) (420) (341) (1,178) (949)
Income (loss) from continuing operations
before income taxes (38) (22) (42) 110
Income taxes (benefit) from continuing operations (6) (6) (5) 49
----------- ----------- ---------- ----------
Income (loss) from continuing operations (32) (16) (37) 61
Income (loss) from discontinued operations (net
of income taxes) (72) 275 280 665
----------- ----------- ---------- ----------
NET INCOME (LOSS) $ (104) $ 259 $ 243 $ 726
=========== =========== ========== ==========
EBITDA - OUTDOOR ADVERTISING $ 893 $ 781 $ 2,624 $ 2,367
=========== =========== ========== ==========
EBITDA MARGIN - OUTDOOR ADVERTISING 39.6% 39.4% 40.3% 40.7%
=========== =========== ========== ==========
EBITDA - TOTAL COMPANY $ 1,124 $ 1,000 $ 3,937 $ 3,584
=========== =========== ========== ==========
EBITDA MARGIN - TOTAL COMPANY 12.9% 11.3% 14.2% 13.4%
=========== =========== ========== ==========
(1) EBITDA is defined as operating income before depreciation and
amortization. It represents a measure which management believes is
customarily used to evaluate the financial performance of companies in the
media industry. However, EBITDA is not a measure of financial performance
under generally accepted accounting principals and should not be
considered an alternative to operating income or net income as an
indicator of the Company's operating performance or to net cash provided
by operating activities as a measure of its liquidity.
11
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
COMPARISON OF THE NINE MONTHS ENDED OCTOBER 31, 2000 AND OCTOBER 31, 1999
OUTDOOR ADVERTISING. Gross sales from the Company's outdoor advertising
increased 12.0% to $6.514 million for the nine months ended October 31, 2000,
from $5.818 million for the nine months ended October 31, 1999. The increase was
primarily attributable to the continual assimilation of the Company's
acquisitions, internal development, increased usage of available sign inventory,
and increases in rates.
Direct operating expenses related to outdoor advertising consist of rental
payments to property owners for the use of land on which advertising displays
are located, production expenses and selling expenses. Selling expenses consist
primarily of salaries and commissions for salespersons and travel related to
sales. Direct operating costs increased 14.9% to $3.024 million for the nine
months ended October 31, 2000, from $2.631 million for the nine months ended
October 31, 1999. The increase is principally due to increases in salaries, sign
repairs, cost of production and utilities. Direct operating expenses as a
percentage of gross revenues for the nine months ended October 31, 2000 was
46.4% compared to 45.2% for the nine months ended October 31, 1999.
General and administrative expenses for outdoor advertising consist of salaries
and wages for administrative personnel, insurance, legal fees, association dues
and subscriptions and other indirect operating expenses. General and
administrative expenses were $705,000 for the nine months ended October 31,
2000, compared to $665,000 for the nine months ended October 31, 1999.
Management fee expenses are corporate general and administrative functions that
include treasury, accounting, tax, human resources, and other support services
and are based on actual amounts as well as a proportionate amount. Management
fee expenses increased 3.9% to $161,000 for the nine months ended October 31,
2000, from $155,000 for the nine months ended October 31, 1999 primarily as a
result of increases in salaries and the related benefits.
Depreciation and amortization expense increased 13.8% to $1.488 million for the
nine months ended October 31, 2000, from $1.308 million for the nine months
ended October 31, 1999. The increase is attributable to scheduled depreciation
of advertising display structures as well as the amortization of goodwill and
non-compete covenants.
Interest expense increased 21.8% to $1.163 million for the nine months ended
October 31, 2000, from $955,000 for the nine months ended October 31, 1999 due
to borrowings to fund acquisitions and internal development.
Other income, net, is gains and/or losses from the sales of assets. Other
income, net, decreased to a net loss of $15,000 for the nine months ended
October 31, 2000, from a net gain of $6,000 for the nine months ended October
31, 1999.
Income (loss) from continuing operations before income taxes decreased 138.2% to
a loss of $42,000 for the nine months ended October 31, 2000, from income from
continuing operations before income taxes of $110,000 for the nine months ended
October 31, 1999 primarily as a result of increases in depreciation and
amortization and interest expense.
Income taxes (benefit) from continuing operations was a benefit of $5,000 for
the nine months ended October 31, 2000, compared to income taxes of $49,000 for
the nine months ended October 31, 1999.
12
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Income (loss) from continuing operations was a loss of $37,000 for the nine
months ended October 31, 2000 compared to income of $61,000 for the nine months
ended October 31, 1999.
The foregoing factors contributed to a decrease in the net income for the nine
months ended October 31, 2000 to $243,000 compared to $726,000 for the nine
months ended October 31, 1999.
EBITDA for outdoor advertising increased 10.9% to $2.624 million for the nine
months ended October 31, 2000, from $2.367 million for the nine months ended
October 31, 1999. The EBITDA margin for outdoor advertising decreased to 40.3%
for the nine months ended October 31, 2000, compared to 40.7% for the nine
months ended October 31, 1999.
TRAVEL CENTERS AND CORPORATE AND OTHER. The results of operations for the travel
centers segment and corporate and other operations have been presented as
discontinued operations in the selected financial data. The following discussion
relates to the results of the Company's discontinued operations. Net sales for
discontinued operations increased 1.1% to $20.929 million for the nine months
ended October 2000 as compared with $20.699 million for the nine months ended
October 1999. Gross profit from discontinued operations decreased 1.6% to $6.276
million for the nine months ended October 2000 as compared with $6.380 million
for the nine months ended October 1999. General and administrative expenses from
discontinued operations decreased 3.6% to $5.124 million for the nine months
ended October 2000 as compared with $5.318 million for the nine months ended
October 1999. Operating income from discontinued operations increased 6.9% to
$724,000 for the nine months ended October 2000 as compared with $677,000 for
the nine months ended October 1999. Income tax expense (benefit) from
discontinued operations decreased 57.2% to $178,000 for the nine months ended
October 2000 as compared with $416,000 for the nine months ended October 1999.
Income from discontinued operations decreased 57.9% to $280,000 for the nine
months ended October 2000 as compared with $665,000 for the nine months ended
October 1999.
COMPARISON OF THE THREE MONTHS ENDED OCTOBER 31, 2000 AND OCTOBER 31, 1999
OUTDOOR ADVERTISING. Gross sales from the Company's outdoor advertising
increased 13.7% to $2.253 million for the three months ended October 31, 2000,
from $1.981 million for the three months ended October 31, 1999. The increase
was primarily attributable to the continual assimilation of the Company's
acquisitions, internal development, increased usage of available sign inventory,
and increases in rates.
Direct operating expenses related to outdoor advertising consist of rental
payments to property owners for the use of land on which advertising displays
are located, production expenses and selling expenses. Selling expenses consist
primarily of salaries and commissions for salespersons and travel related to
sales. Direct operating costs increased 15.1% to $1.057 million for the three
months ended October 31, 2000, from $918,000 for the three months ended October
31, 1999. The increase is principally due to increases in salaries, sign
repairs, cost of production and utilities. Direct operating expenses as a
percentage of gross revenues for the three months ended October 31, 2000 was
46.9% compared to 46.3% for the three months ended October 31, 1999.
General and administrative expenses for outdoor advertising consist of salaries
and wages for administrative personnel, insurance, legal fees, association dues
and subscriptions and other indirect operating expenses. Management fee expenses
are corporate general and administrative functions that include treasury,
accounting, tax, human resources, and other support services and are based on
actual amounts as well as a proportionate amount. General and administrative
13
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
expenses were $245,000 for the three months ended October 31, 2000, compared to
$230,000 for the three months ended October 31, 999. Management fee expenses are
corporate general and administrative functions that include treasury,
accounting, tax, human resources, and other support services and are based on
actual amounts as well as a proportionate amount. Management fee expenses
increased 11.5% to $58,000 for the three months ended October 31, 2000, from
$52,000 for the three months ended October 31, 1999 primarily as a result of
increased salaries and the related benefits.
Depreciation and amortization expense increased 10.6% to $511,000 for the three
months ended October 31, 2000, from $462,000 for the three months ended October
31, 1999. The increase is attributable to scheduled depreciation of advertising
display structures as well as the amortization of goodwill and non-compete
covenants
Interest expense increased 19.5% to $405,000 for the three months ended October
31, 2000, from $339,000 for the three months ended October 31, 1999 due to
borrowings to fund acquisitions and internal development.
Other income, net, is gains and/or losses from the sales of assets. Other
income, net, decreased to a net loss of $15,000 for the three months ended
October 31, 2000, from a net loss of $2,000 for the three months ended October
31, 1999.
Income (loss) from continuing operations before income taxes decreased 72.7% to
a loss of $38,000 for the three months ended October 31, 2000, from a loss from
continuing operations before income taxes of $22,000 for the three months ended
October 31, 1999 primarily as a result of increases in depreciation and
amortization, and interest expense.
Income taxes (benefit) from continuing operations was a benefit of $6,000 for
the three months ended October 31, 2000 and 1999.
Income (loss) from continuing operations was a loss of $32,000 for the three
months ended October 31, 2000 compared to a loss of $16,000 for the three months
ended October 31, 1999.
The foregoing factors contributed to net loss for the three months ended October
31, 2000 of $104,000 compared to net income of $259,000 for the three months
ended October 31, 1999.
EBITDA for outdoor advertising increased 14.3% to $893,000 for the three months
ended October 31, 2000, from $781,000 for the three months ended October 31,
1999. The EBITDA margin for outdoor advertising increased to 39.6% for the three
months ended October 31, 2000, compared to 39.4% for the three months ended
October 31, 1999.
TRAVEL CENTERS AND CORPORATE AND OTHER. The results of operations for the travel
centers segment and corporate and other operations have been presented as
discontinued operations in the selected financial data. The following discussion
relates to the results of the Company's discontinued operations. Net sales for
discontinued operations decreased 6.3% to $6.378 million for the three months
ended October 2000 as compared with $6.808 million for the three months ended
October 1999. Gross profit from discontinued operations decreased 3.4% to $1.897
million for the three months ended October 2000 as compared with $1.964 million
for the three months ended October 1999. General and administrative expenses
from discontinued operations decreased 4.1% to $1.724 million for the three
months ended October 2000 as compared with $1.797 million for the three months
ended October 1999. Operating income from discontinued operations decreased
41.9% to $18,000 for the three months ended October 2000 as compared with
$31,000 for the three months ended October 1999. Income tax expense (benefit)
14
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
from discontinued operations decreased 125.0% to a benefit of $43,000 for the
three months ended October 2000 as compared with income tax expense of $172,000
for the three months ended October 1999. Income (loss) from discontinued
operations decreased 126.2% to $72,000 for the three months ended October 2000
as compared with $275,000 for the three months ended October 1999.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 2000, the Company had working capital of $4.434 million and a
current ratio of 1.9:1, compared to working capital of $4.166 million and a
current ratio of 2.1:1 at January 31, 2000. The current ratio is the ratio of
total current assets to total current liabilities or the dollars of current
assets to cover each dollar of current debt (most frequently expressed a
coverage of so many times). Net cash provided by operating activities was $3.151
million for the nine months ended October 31, 2000, compared to $2.724 million
for the nine months ended October 31, 1999. Net cash provided in the current
period is primarily attributable to increased depreciation and amortization
expense and other operating assets and liabilities.
Net cash used in investing activities for the nine months ended October 31, 2000
was $1.321 million, of which $1.496 million was used for purchases of property
and equipment, partially offset by proceeds from sales of assets. For the nine
months ended October 31, 1999, net cash used for investing activities was $4.905
million, of which $4.144 was used for purchases of property and equipment and
$1.516 million was used for acquisitions.
Net cash used in financing activities for the nine months ended October 31, 2000
was $65,000 as compared to cash provided by financing activities of $2.009
million for the nine months ended October 31, 1999. At October 31, 2000
financing activities were primarily a result of borrowings and payments on debt
as well as proceeds from stock options exercises. At October 31,1999, financing
activities were primarily a result of borrowings and payments on debt.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The principal market risks to which the Company is exposed to are interest rates
on the Company's debt. The Company's interest sensitive liabilities are its debt
instruments. Variable interest on the majority of the Company's debt equals
LIBOR plus an applicable margin. Because rates may increase or decrease at any
time, the Company is exposed to market risk as a result of the impact that
changes in these base rates may have on the interest rate applicable to Company
borrowings. Management does not, however, believe that any risk inherent in the
variable rate nature of its debt is likely to have a material effect on the
Company's financial position, results of operations or liquidity.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities and Use of Proceeds. None.
Item 3. Defaults Upon Senior Securities. None.
15
BOWLIN
OUTDOOR ADVERTISING & TRAVEL CENTERS
INCORPORATED AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a). Exhibit No. Exhibit Name
27 Financial Data Schedule
(b). Form 8-K was filed on October 17, 2000.
Signatures
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: December 13, 2000
BOWLIN
Outdoor Advertising & Travel Centers Incorporated
/s/ Michael L. Bowlin
Michael L. Bowlin, Chairman of the Board,
President and Chief Executive Officer
/s/ Nina J. Pratz
Nina J. Pratz, Chief Financial Officer
(Principal Financial and Accounting Officer)
16